The Cheesecake Factory, Inc. (NASDAQ:CAKE)
CAPS Rating:
Operates upscale, full-service, casual dining restaurants under The Cheesecake Factory® and Grand Lux Cafe® marks. The Company also operates one self-service, limited menu express foodservice operation under The Cheesecake Factory Express® mark.
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Large Cap stock at 1.9b so PE is the focus. Avg 5 yr PE 22.7.
Q3, EPS=0.99. Based on Average PE, target 22.47. At that time it was 30.37, overpriced by 30+%. The new earnings from Q3 would put the target at (0.99+.36)*22.7=30.65 so people sold off on the Q3 report because the stock was priced right before the report. The sell off eventually reversed and trended up to 30.74 before pulling back so the correct price is still 30.65 before the Q4 report. Even if the stock hit the low estimate of 0.31, that would put the next target at (.99+.36+.31)*22.7=37.68 so the stock has some room to move even on the the worst case earnings.